Council slashes $1.6m in spending due to shortfall

The Dover City Council unanimously cut the city’s general fund spending by $1.6 million at its Jan. 26 meeting.

Jayne Gest, Staff Writer

The Dover City Council unanimously cut the city’s general fund spending by $1.6 million at its Jan. 26 meeting.

Councilman Timothy Slavin pointed out that this is approximately 5% of the fiscal 2009 general fund budget, which is similar to what others are going through.

“This is not without pain, certainly that we are making these cuts, but I think some of the pain was been taken away by the fact … that this kind of revenue forecasting is not something that is new to us,” he said. “I think we all were able to see that the trends were going where we [are] and we knew we had to take corrective action.”

City Manager Tony DePrima said they cut spending from a variety of sources and departments and took advantage of some reserves and credits.

The city is reducing operating budgets by $499,000, with approximately 70% of that coming from salaries and benefits. DePrima said they have not filled positions in order to keep from laying off full-time employees.

The city also cut $840,000 from the capital budget, with half coming from vehicle purchases, mostly in the police, grounds and street departments.

“We are very much a workforce that is behind the wheel of a vehicle, more so than behind a desk, between police officers and inspectors and line crews and trash crews and meter readers,” DePrima said. “A good part of our workforce is actually a mobile workforce, and so taking from our vehicle fleet and postponing purchases is a very serious thing.”

The remaining spending cuts came from using parkland reserves and a state health insurance credit.

Councilwoman Beverly Williams asked why some departments saw bigger cuts than others, to which DePrima replied that they didn’t want to cut back on services or have layoffs. Some departments, in order to meet a certain percentage cut, would have had to have service cutbacks, he added, using the example of the library which would have had to reduce hours.

They used their judgment, he said, and also looked at what departments were funded solely by the general fund. Those departments had to carry the greater burden.

“We have put together a proposal for budget revisions that not only addresses that $1.6 million but also adds a defensive cushion – if you will – of about another $200,000 and even behind that cushion there’s another defensive cushion,” DePrima said.

The secondary cushion he spoke of is a scheduled transfer of $200,000 to the city’s capital asset reserve.

These cushions, DePrima said, make him more comfortable, in case revenue comes in even lower than they expect, although they’ve tried to plan conservatively.

If the situation changes for the better, DePrima will come back before council to ask for some of the capital improvements they’ve deferred.

“You’ve heard me say many times before on deferring capital investment, you know you’re really just putting off the payment for later and at some point these vehicles have to get replaced,” DePrima said. “These things start to pile up.”

Councilman Thomas Leary asked the city manager if he felt this will be the end of the cuts; DePrima replied he was fairly sure it would be.

“I’m starting to feel a little more confident. I’ve actually talked to a number of realtors who have said that the housing market has picked up a little bit,” he said.

Although the net shortfall is $1.6 million, the actual revenue shortfall was higher. The difference comes from expenses they have not accrued, DePrima said.

There has been $1.8 million less in general fund revenues than was projected in the fiscal 2009 budget, originally projected at $33.6 million, said city Controller/Treasurer Donna Mitchell.

Of that shortfall, $1.2 million was due to fewer transfer taxes collected. Others factors are fewer Court of Chancery fees, interfund transfers from the electric and water/wastewater funds, and business license fees, she said.

However, the general fund isn’t the only place looking at shortfalls.

The water/wastewater fund looks to be approximately $995,000 lower in revenue than projected, dropping from $12.8 million to $11.8 million.

The electric fund is projected to have an approximately $1.5 million shortfall, from $104 million to $102.5 million. Mitchell clarified they are still reviewing those numbers.

“We are still evaluating the water and wastewater fund, but really the real concern was the general fund, in particular the lack in receiving transfer taxes which goes directly to the slowdown in the real estate economy,” DePrima said.

The city manager later added he and his staff are more concerned with the water/wastewater than the electric fund and will bring more final numbers in February.